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Press Note 1 - Hope For Foreign Investors
June 2005 | India Practice | Regional | Regional Reports

The dreaded Press Note 18 has been scrapped. Press Note 18 made it mandatory for foreign investors having joint ventures in India, to obtain a No Objection Certificate from their Indian partners prior to venturing into the same or allied field of business.

The Press Note 18 has been superseded by Press Note 1 of 2005. Now a foreign party, having any joint venture prior to 12 January 2005, needs to apply to the Government for investment into the same field of business as its joint venture.

The onus to provide requisite justification to the satisfaction of the Government that the proposed investment would or would not jeopardize the interests of the existing joint venture or technology/trademark partner or other stakeholders would lie equally on the foreign investor and the Indian partner.

In so far as future joint ventures are concerned, the joint venture agreement may embody a 'conflict of interest' clause to safeguard the interests of joint venture partners in the event of one of the partners desiring to set up another joint venture or a wholly owned subsidiary in the 'same' field of economic activity.